Archive for the ‘Business’ Category

How Fred Wilson Sees the Next Ten Years

By Eleanor Haas

Just yesterday, at the LeWeb conference in Paris, VC, blogger and thought leader Fred Wilson identified three megatrends that his VC firm uses as a framework for investing and four areas they’re watching. Things like mobile and big data are technologies that represent too small a lens when it comes to envisioning the big opportunities to come, he said. For him and his colleagues, it’s about adopting a behavioral and societal point of view.
The three trends are networks, unbundling and smartphones, and the four areas are Bitcoin, wellness, data leakage and trust/identity.

1. Networks
We’re very early in the transition from slow bureaucratic hierarchies to technology-driven networks. The hierarchies were solutions of the industrial world, but today they’re obsolete – just plain inefficient. Examples? Twitter replaces the slow-moving bureaucratic news organization that sits behind every newspaper. With Twitter, the crowd determines what’s news, and we get it instantly. YouTube replaces traditional video production. Again, the crowd determines what’s important – and quality rises to the top. SoundCloud disintermediates the music industry by enabling music creators to upload, record, promote and share their sounds to be found by the crowd.
We saw this happen first in media and entertainment, but now it’s happening with hotels (Airbnb), creative services (Kickstarter) and learning (Codecademy).

2. Unbundling.
Cost factors made it desirable to package and deliver products and services in bundles. Now technology makes it cost-effective to deliver focused services a la carte. Examples? Getting sports news from a different source than business news or classified ads. Finding free-standing services once bundled by banks – Lending Club and Funding Circle – asset management, education – where online classes are disrupting the traditional four-year university model – research – where technology enables researchers to collaborate freely as a network – and entertainment – where Netflix, YouTube, Hulu and VHX let us buy shows a la carte instead of having to subscribe to cable.

3. Smartphones
By carrying smartphone, we become always-on nodes in a network. Examples? Uber and Halo are disrupting taxi and limo services, rental cars and delivery businesses. Payment platforms, such as Venmo, Dwalla and Square are phone apps. Tinder is a dating app that leverages location as well as the phone.

Four Areas to Watch

Bitcoin, says Fred, is important as the transactional protocol for the Internet, not as currency. It provides a global peer-to-peer ledger and a technology-based architecture that entrepreneurs can and will build on so that payments, in time, will flow on the Internet like content and images, not controlled by any company.

Health and wellness platforms and tools, not healthcare, will be increasingly important ways to help people avoid the need for healthcare. Examples? Wearing devices that report physical activity and vital signs, a phone device that provides fertility information for women, gamified weight loss initiatives.

Data leakage is Fred’s term for how we allow our own personal data to be open for spying by Google, Facebook and the government while we ourselves have no control over it.

Trust/identity, both of which are closely allied to the data leakage area are currently managed by Google, Facebook, Amazon, Twitter. We give them access to all that we do online. In time, he predicts, there will be a protocol, just like http, that allows us to control our identity, trust and data.

So what areas are you watching? What mega trends seem to you to be significant indicators of what lies ahead?
(You can see the video of Fred’s keynote here. http://bit.ly/1cByjEg )

The Future is Internet Access. not Devices

Frugal innovation that’s just good enough to enable free mobile Internet access in order to supports a focus on education for billions of low-income people. That’s both the personal and business mission of Suneet Singh Tuli, CEO, Datawind. The outcome? The first $40 tablet computer – the Aakash – launched first by the president of India, then by the UN Secretary General and today in use by thousands of students in India.

Suneet’s business goal is to create a low-price product that impacts people’s lives and, yes, make money from it. “I am not a charity,” he declaims. The Datawind business model is to forgo most of the company’s hardware margins and to focus instead on recurring revenue from content and apps in order to go after and, in time, own the price-sensitive consumer.

He believes everyone should focus on education. Education corrects everything, he says. No, the low-cost computer is not intended to replace teachers but to supplement what they can do. His sons get answers to all the questions they have after school from YouTube! And Forbes International recently recognized Suneet in its annual impact 15 list of education innovators.

Lesson No. 1 for US entrepreneurs: “just good enough” should be part of innovation. It’s not disruptive technology that wins; it’s the one the gorilla ignores – as we learned from Clayton Christiansen. Large companies, such as Apple and Samsung, could own the low-cost tablet market but it would dilute their brands to say nothing of their margins. Their business model is based on creating and producing high-quality, highly profitable hardware. Suneet’s, on the other hand, is to use hardware as a customer acquisition tool.

Lesson No. 2: the future is Internet access, not devices, in Suneet’s view – with money coming not from devices but from content, apps and advertising. In fact, Suneet’s next goal, in addition to bringing the cost of the Aakash down to $25, is to spark a global ecosystem of socially positive apps that empower women.

Whither Online Content?

Sponsored content may not be new, but its role as a replacement for traditional advertising certainly is. So is the new acceptance of the collapse of the long-standing wall that separated content and advertising. What makes this new situation acceptable is transparency about the sponsor and assurance that the editorial content was created independently of the sponsor.

These were among the takeaways of a lively discussion among content and advertising experts about Content and Commerce organized by Gotham Media Strategies and Frankfurt Kurnit at yesterdays digital breakfast. Rick Kurnit, of Frankfurt Kurnit, moderated; Glenn Hall, of TheBlazecom; Eason Jordan, of NowThisNews; Scott Kurnit, of KEEP Holdings; Rob Rasmussen, of Story Worldwide and Rebecca Sanhueza, of Time, inc. were panelists.

However “native ads,” i.e., branded content, is not acceptable when it tries to trick people into believing it’s not advertising. And everyone agrees that advertising sucks when it’s annoying and intrusive. But even overt paid content, i.e., ads, can be great. Three campaigns were cited that have won universal acclaim; Nike’s advertising, which delivers inspirational content that empowers consumers; Dove’s, which establishes a relationship with consumers about beauty and how you see yourself and is more like direct marketing, and AT&T’s It’s Not Complicated series, which uses kids’ imaginations to turn boring brand attributes into pure fun.

Interestingly, online e-commerce businesses like KEEP, are bypassing advertising altogether and simply delivering thousands of products for consumers to buy and share.

So then comes the question can any brand create content? The answer is a flat No. Not all brands have the legitimacy to create content. They need to have both a point of view that carries throughout all the brand’s actions and audience respect for that point of view.

The big question about unbranded content, i.e., pure news, or journalism, is the business model. Originally, this relied on the monopoly of news media, which enabled content scarcity and exclusivity. Gone! Today, we have content abundance and ubiquity. One requirement has never changed: relevance to viewer/user interests and needs. So traditional media, like Time Inc.’s magazines, aim to serve both consumers and advertisers by delivering targeted niche audiences to advertisers and targeted content to those audience segments.

What TheBlaze is attempting carries this one step further, developing special content products appropriate to specific advertiser messages and also relevant to TheBlaze audience.

What’s the future business model for journalism? No one knows. But probably a hybrid of subscription fees and advertising with quite probably some commerce as well!

Data Data Everywhere

Like the Ancient Mariner who had “water, water everywhere, but not a drop to drink,” we have data, data everywhere, but not the understanding we need about it.

What is it?

What does “big data” mean?  What defines it?  Wikipedia focuses on the volume and speed of data.  IBM talks about the 4 Vs – volume (size), velocity (how fast it moves), variety (how diverse the ways are that it’s put together), and veracity (the question of what to believe).  But that leaves out how complex it is and what you’re doing with it.  “Big data’ is more about how you think of the data and its use and the set of skills you have in place to do this.

That’s how it began – a recent panel discussion on Big Data in Healthcare, organized by NYC Health Business Leaders, introduced by Bunny Ellerin and skillfully moderated by Yin Ho, MD, MBA and CEO of Context Matters, Inc.  Other speakers were Charles Beever – Partner, Booz & Company;  Asaf Evenhaim, CEO, Crossix;  Greg Jackson, Chief Data Officer, Everyday Health, and Charlie Schick, Ph.D. – Director, Big Data Solutions, Healthcare and Life Sciences, IBM.

A few takeaways:

  • When we don’t know how to handle something, we give it a name, so we labeled the situation “big data,” but the words do not in fact describe what we mean. What we need to do is figure out is how to use data.  That’s the starting point for addressing the “big data” conundrum.  Data collection and creation follow the 4 Vs.  But the other side of the coin is how you use data and turn it into monetizable opportunities.  As the world becomes more digitized, data velocity becomes intense, and creating new ways to use data becomes critical.
  • “Big data’ means pulling multiple sources together and looking at the result.  In the old days, we looked at “small data.’  Volume and speed are not good examples.  The key is how we understand and go to the next level of how we analyze it.  Today we have better data competency, a better understanding of what data is supposed to tell us.
  • Combining data sets used to be difficult.  Today, automated systems make data collection easy.  The challenge becomes curation, selecting and combining data sets in ways that make sense. Yes and the data has to be accessible.  It’s not enough just to capture and store it.
  • Data is like oil.  Risky.  Hard to extract.  But, once refined, valuable. (Courtesy of Charlie Schick!)

How do you differentiate signal from noise?

The volume today is too great to eyeball data and find meaning.  We need different tools.  The kinds of questions we ask about the data haven’t changed.  According to Asaf Evenhaim, what’s new is our ability to process the ne volume of data.  Visualizations can make the difference.  They help us see patterns that show relationships, i.e., the signal within the noise.

With big data, it’s all noise until you find the signal, said Greg Jackson.   All of it has value.  What you have to do is to discern the hypothesis in order to find the signal.  Research used to start with a hypothesis; now we start with data and that drives the hypothesis,

How important is domain knowledge?

Domain expertise is crucial to get value from data – to understand the business and have the ability to manipulate the data

Are There Too Many Startups?

That was a question put to Albert Wenger, Managing Partner at Union Square Ventures (USV), after his remarks last week at the BMW I Born Electric event.  Might this be a fad – like doing a band in the 70s? No, no and no, says Wenger.  We’re at the beginning of a transformation as big as the one from agriculture to industrial, he explained.  We need a lot of experimentation.  Even failures have social benefits in terms of the experience gained in taking risks, making decisions, etc.  This can benefit both large and small companies.

And today’s startups have a higher potential for life expectancy.  A lot of historical investing was binary, win-lose.  Now a small team with low capital expenditures can keep on going even if the business is not really hitting.

A significant outcome of seeing startups from the long-term perspective of sweeping transformation is USV’s “thesis-driven investing” – putting more emphasis on the principles of large-scale change than on traditional investing criteria, like market size, competitive situation, etc. No. 1 among these principles is the insight that networks will replace old hierarchies, with the unbundling of traditional services – single purpose services replacing all-in-one traditional newspapers, for example.  Classified ads went to Craig’s List.  Commentary went to blogs.  Breaking news went to Twitter.  People can find the other pieces just one click away, with no need for a single source.  All the companies in USVs investment portfolio exemplify this – among them, Lending Club, Pollenware and Edmodo, two in finance, one in education.  But no sector will escape.  Healthcare and government are just down the line..

In transportation, Wenger sees cars doing three things:  delivering transportation on demand, self-expression and fun and alone time.  Transportation, in turn, can mean delivering my body from point to point or solving an information problem.  Startups like Buzz Car and GetAround are examples of early peer networks that make it unnecessary to control your own car or where it goes.  Online shopping and delivery services can replace the need to get information by going to the grocery store.

Of course, as one audience member commented, industries under siege go to the government for help.  The hotel industry is opposing Airnb’s travel guides to staying in people’s apartments with regulations against renting out spare rooms.  The Taxi & Limousine Commission got a cease-and-desist against Uber, NYC’s on-demand car service. So then we have the inaugural peer network summit in San Francisco.  The battle is engaged:  yesterday vs. tomorrow!

First cousin to the notion of too many startups is the meme that social media are all frivolous.  But social is also becoming the enabling glue for how ideas are shared and funded. Hierarchical research journals and funding processes (NIH) are beginning to lose ground to innovations like Mendeley, a peer-network blog for sharing scientific research, and Kickstarter and others, which are extending their scope to research.  A huge flowering of research can be expected as a result.

Even Bigger than the Internet

The cloud is changing everything.  The change is even bigger than the change we saw from the Internet.  It will change how every business operates.  That’s what a cloud computing expert told me – Roger Krakoff, founder and managing partner of Cloud Computing Partners, a venture capital firm that invests exclusively in cloud computing.  I didn’t get it.  How could this be?  Then I had a second conversation with Roger.

An HBR Analytic Services white paper gave me the core of a cloud computing definition I like:  “enables access through the Internet to a shared pool of computing resources (hardware, software, etc.) that can be tapped on demand and configured and scaled up or down as needed.”  But it stops there.  Thanks to Roger I could now add “by any computing device.”  That was the missing link.  It’s the mobile implications that make cloud computing transformational – not merely evolutionary.   Aha!

But then came an e-mail exchange and Roger’s P.S. “better to think of cloud computing as dial-tone or electric power.  It is there when you need it.  Pay by the unit and it just works.”  Bingo!  The cloud is the new utility – like electrical power or water or the Internet!  One source of its power to transform businesses is what happens when it handles business transactions.  And this is already happening in a really big way. 

On May 17th, IBM released the following stats about its enterprise SmartCloud services customers:   one million enterprise application users working on the IBM Cloud.  More than $100 billion in commerce transactions a year in the cloud.  4.5 million daily client transactions conducted through the IBM Cloud.  And that’s just one major vendor of cloud services! 

What’s more it’s just the beginning.  TopCoder, the world’s largest open innovation community, with 400,000 developers is moving to the IBM SmartCloud Enterprise.  From this we can expect an exponential increase in innovation, as these developers support the organizations for which they work with the entire innovation process – from ideation, software engineering and analytics to implementation, testing and support.

At YouTube (http://www.youtube.com/ibmcloud) I found the moving story of how the cloud has transformed the Bari fishing industry – and made life better for the fishermen and their families with a new business model.  Until recently, the fishermen caught too many fish.  They exceeded market demand, Thanks to cloud computing, they can now communicate how many fish they are catching in real time and a virtual market can sell the fish before the boats dock.  Now they catch only as many fish as the market consumes, their income is up 25 percent and the time to market is down 70 percent.  Wow!  That’s innovation that matters!

What Difference Does it Make?

By Eleanor Haas

What differences does it make?  That’s the first question for every entrepreneur and innovator.  

The country – and the world for that matter – is buzzing with new start ups.  Most of them will fail of course and it won't matter because most really don’t makd a difference for anyone.

How does your product differentiate itself?  That’s what the investor will ask – because being different from other products that serve similar purposes is fundamental to being marketable.

But isn’t it time for new companies and new products to make a difference as well as differentiate?  We live in a time when every product category is already saturated with options.  That’s why branding has become hot.  Creating a distinctive image in the minds of customers is the sine qua non of differentiation.  Now some entrepreneurs and innovators are adding an important new dimension to differentiating.  They are creating new ways to improve the quality of life.

Arshad Chowdhury did that to create Cleargears, a startup that promises to make a difference for employees of any company sufficiently enlightened to deploy it.  What it delivers is a system for real-time performance review by everyone of everyone.   Unlike the traditional process – and that hasn’t changed for years – where performance review occurs in huge chunks once a year from the narrow perspective of people at the top, Clearview delivers ongoing feedback in bite-sized chunks from the 360-degree perspective of everyone you work with – anonymously. The vision of Arshad and his early customers alike is that companies can perform better if they help everyone on the team perform better as well

Sandy Heck, MD, is making a difference with Reach Bionics, a start up that is developing technology to help paraplegics wirelessly control electronic devices by activating vestigial muscles around the ears.  

Michael Huerta and his partners at BrightPath Energy are making a difference by applying their skills in providing capital and deal infrastructure to the renewable energy sector.  One of their first projects is Power.ly, an angel-stage product company that solves cost and logistical problems for remote electricity – such as post-disaster, rural areas, the battlefield, or anywhere the grid is limited – with a truly portable generator that uses solar power. 

When I’m lucky enough to discover start ups like these, I hear Stevie Wonder’s lyrics echo in my head: “And I think to myself, what a wonderful world.”

The New News: Vox Populi

By Eleanor Haas

  • A new Greenpeace campaign targets Apple’s cloud computing products, as it looks to “clean the cloud around the world.
  • A smooth animation of a timelapse of planet Earth from ‘Electro-L’, a geostationary satellite orbiting 40,000 kilometres above the Earth.
  • A blind-folded guy entertainingly told at his bachelor party that he’s about to bungee-jump 50 feet – only it’s more like 5 feet into a pool of water!
  • Honda’s new ‘UNI-CUB’ personal mobility device.
  • A graphic undercover investigation, by the Humane Society of the United States, into the walking horse industry discovers cases of rampant cruelty.

These are Storyful Daily’s “Five of the best on YouTube” for today.  Not exactly “all the news that’s fit to print” or any other major daily’s take on world news, is it? 

To the five best on YouTube, Storyful adds its five best in sport, five best in weather and five general stories – Frankfurt protesters, fans mourning the death of disco queen Donna Summer, a PAC plan to attack Obama, the effect of a Twitter hashtag on a Spanish bank and a live-tweeted journey through a region facing a hunger crisis.

It’s the new news from Storyful, the brainchild of an Irish journalist.  Storyful’s professional journalists sift “actionable news” from the chaff of the real-time web for use by news organizations throughout the world, acting as a “social media ‘field producer'” and providing an online window into their findings for the general public.  For both its media clients and the general public, the result is access to authentic views on recent events or developments and early warnings of what could be big stories to come.  It adds a valuable social dimension to what we call “news.”

The New Communication: Electronic, Social & Mobile Media

By Eleanor Haas

For some years, I had six phone lines on each of two instruments and a phone at one ear or the other – sometimes both – many hours a day.  I also had a third instrument with my private line to be sure I could call out no matter what and certain key people could always reach me.

Now I’m so rarely on the phone that I often don’t even bother to check for voice mail messages.  It’s easy to manage with merely one land line phone and a cell phone!  Lots of people find all they need is the cell phone.

What happened?  We abandoned synchronous communication and gained control of our time.  We send and receive text and email messages instead of calling.  We also went from long-form to bite-sized messages and, at the same time, to more frequent brief interactions,

Not long after the new communication formats started, social media entered my life – Facebook about 2002, Linked In a few years later and Twitter after that.  I have what one friend calls “a robust presence” on all three but spend little time on Facebook, not much more on Twitter and probably the most on Linked In.  On Facebook, it’s fun to interact periodically with distant friends at times we’d typically have no communication.  On Twitter, it’s helpful to discover and share insights.  Linked In has become an invaluable reference tool, only rarely used to communicate, let alone interact, but the only way to reach some people at times.  So all three add value for me in different ways.  They supplement live interaction uniquely.

Does any of this replace live interaction?  No way!  My calendar is full – and it's only thanks to email and text messages that I can keep it straight!

Sherry Turkle, social scientist, author and MIT professor, argues that our increasing use of email, text messaging and social media has a negative impact on the social fabric and demonstrates evidence of diminished expectations of our relationships with other people and of a personal power-grab for control of interactions.  Bah, humbug!

Any media can of course be used for positive or negative reasons and with varying results.  But, in my experience, contrary to Dr. Turkle’s perception, the new ones enrich the social fabric with an infinite number of contact points that have never existed before, they provide the convenience of communication on demand – free of interaction – and they allow each of us to manage our time more productively without losing touch

 

It Takes Two To Tango!

A classic mistake for start-ups is to ask one name to fly solo. It’s usually the product name. Since entrepreneurs have to be obsessed with their product to start a business, that’s probably to be expected. But then how can you be sure you’re talking about the company when it has the same name as the product? Which brand promise do you want to imply or express?

Apple Computer owes its name to a small apple farm where Steve Jobs spent time each year with friends in the mid-70s. And it was the name of both the product and the company until the Lisa, Mac and other new products came along. That’s the typical pattern for start-ups. It was also a long time ago in terms of today’s marketplace.

Today you need all the brand power you can get to claim and hold a place in customer minds, and you need this the minute you start marketing.

Products can be treated as brands – given proprietary names and a brand platform as the backbone of marketing communications efforts. Or they can be given descriptive names and associated with a brand. But they’re missing out if they are denied the halo effect of a corporate brand.

The corporate brand is the face of a business strategy – what the company wants to be known for. In time, it becomes the organizing principle that simplifies the complexity of multiple products and the umbrella that facilitates new product acceptance.

The cost need be no greater for two than for one if you do it right – and you’ll build a far stronger foundation for ongoing sales and profits with both.